Interview Questions › Metrics

Trade-off: removing cash on delivery for low-rated sellers

Meesho tested removing cash on delivery (COD) for sellers with low ratings. Returns fell, but orders from those sellers fell more. How do you evaluate the test and decide?

Context

Most Meesho buyers are in smaller cities and prefer COD. Returns and RTO are a major cost.

Clarifying questions to ask first

• Did buyers switch to other sellers?
• What is the cost of one RTO?

How to approach it

1. Clarify what the test was meant to improve
2. Unit economics: cost per return vs margin per order
3. Did demand shift to better sellers or leave?
4. Fairness to sellers and buyers

Framework: Goal of the product -> Users and value exchange -> North Star -> Supporting metrics by funnel stage -> Guardrails and counter-metrics -> Decision or target

Sample answer

• Platform contribution margin per buyer
• Share of lost orders that moved to higher-rated sellers
• Buyer 30-day repeat rate

1. Orders from affected sellers fell 30%, RTO fell 45%
2. 60% of lost orders moved to higher-rated sellers in the same category
3. Buyer repeat rate unchanged; platform contribution margin up 4%

Ship with a seller improvement path: margin rose and most demand moved to better sellers without hurting buyers. Judge by platform contribution margin and buyer repeat rate, and give low-rated sellers a clear way to earn COD back.

What interviewers look for

• Contribution margin
• RTO rate
• Buyer retention